ESSA Bancorp, Inc. (the “Company”) (NASDAQ:ESSA) today reported net
income of $1.8 million, or $0.16 per diluted share, for the quarter
ended June 30, 2017, compared with net income of $2.1 million, or
$0.20 per diluted share, for the same quarter last year. For the
nine months ended June 30, 2017, the Company reported net income of
$5.3 million or $0.50 per diluted share compared with $6.2 million
or $0.59 per diluted share for the nine months ended June 30, 2016.
The Company is the holding company for ESSA Bank & Trust
(the “Bank”), a $1.8 billion asset institution, which provides full
service retail and commercial banking, financial, and investment
services from 26 locations in eastern Pennsylvania, including the
Poconos, Lehigh Valley, Scranton/Wilkes-Barre and suburban
Philadelphia markets.
“Our third quarter and year-to-date financial results were
highlighted by increased lending activity and contributions from
our commercial banking operation, where we have invested in people
and infrastructure to drive growth,” said Gary S. Olson, President
and CEO. “During the past year, we have more than doubled the size
of our commercial banking team, established new regional offices in
the Lehigh Valley and Philadelphia markets to facilitate
relationships with customers and the community, and integrated
systems to support our activities.
“Year-over-year earnings comparisons in both periods reflected
some revenue declines in sectors such as residential mortgages and
indirect auto lending, as well as moderately higher personnel costs
resulting from our expanded team. We believe we have directed
resources to the best opportunities for growth and profitability.
We are nearing completion of a companywide initiative, detailed
later in this release, to enhance productivity, drive operating
efficiency, and identify our best growth opportunities. Our senior
management team, which is directing this initiative, is excited
about the potential these system and process enhancements offer to
generate accelerating profitability.”
THIRD QUARTER, NINE MONTHS OF 2017
HIGHLIGHTS
- For the nine months of 2017, total interest income was $43.4
million compared with $43.7 million for the nine months of 2016,
reflecting increased contributions from commercial lending and
investment income, offset by lower interest income from mortgage
and indirect auto lending.
- Loans receivable, net, increased to $1.224 billion at June 30,
2017 from $1.219 billion at September 30, 2016.
- The commercial real estate portfolio increased 7% to $308.7
million at June 30, 2017 from $288.5 million at September 30, 2016,
and the commercial & industrial loan portfolio increased to
$40.7 million from $40.0 million during the same period.
- Asset quality remained strong, with non-performing assets of
$20.8 million, or 1.18% of total assets, at June 30, 2017 compared
to $22.0 million, or 1.24% of total assets at September 30,
2016.
- Noninterest bearing demand deposits, primarily reflecting
expanded commercial banking activity, increased to $155.0 million
at June 30, 2017 from $142.9 million at September 30, 2016.
Lower-cost core deposits (non-interest and interest bearing demand
accounts, money market and savings) as a percentage of total
deposits were 58% of total deposits at June 30, 2017 compared with
51% a year earlier.
- Total stockholders’ equity increased to $180.6 million at June
30, 2017 from $176.3 million at September 30, 2016 and $177.5
million at June 30, 2016. Tangible book value per share at June 30,
2017 increased to $14.21, compared with $14.05 at September 30,
2016.
- Retained earnings demonstrated continued growth, increasing to
$90.1 million at June 30, 2017, compared to $87.6 million at
September 30, 2016 and $87.0 million at June 30, 2016.
- The Company paid a quarterly cash dividend of $0.09 per share
on June 30, 2017, its 37th consecutive quarterly cash dividend to
shareholders.
“We were pleased that even as we made investments to drive
long-term growth and grow our commercial banking business, overall
expenses were lower year-over-year in both quarterly and
year-to-date comparisons,” Olson explained. “Expenses in a number
of categories declined, reflecting a focus on improving efficiency
and reducing cost. We believe our action plans will enable us to
build on this trend.”
Quarterly, Year to Date 2017 Income Statement
Review
Total interest income was $14.4 million for the three months
ended June 30, 2017, down from $14.7 million for the three months
ended June 30, 2016. Interest income from loans declined to $11.8
million in fiscal third quarter 2017, compared to $12.4 million a
year earlier. Interest expense increased $384,000 for the quarter
ended June 30, 2017 compared to the same period in 2016, partially
reflecting a larger base of deposits and rising short-term interest
rates. Total interest income for the nine months ended June 30,
2017 decreased $260,000 to $43.4 million compared to the same
period in 2016. Total interest expense increased $879,000 to
$9.3 million for the nine months ended June 30, 2017 compared to
the same period in 2016.
Primarily reflecting modestly lower interest income from loans
receivable and increased interest expense, net interest income was
$11.2 million for the three months ended June 30, 2017, compared to
$11.9 million for the same period in 2016. Net interest
income for the nine months ended June 30, 2017 was $34.1 million
compared with $35.2 million for the nine months ended June 30,
2016. The provision for loan losses in both periods of 2017
increased compared to comparable 2016 periods, reflecting
additional provisioning related to increased loan charge-offs.
The net interest margin for the third quarter of
2017 was 2.74%, a decrease from the previous quarter’s margin of
2.80%, and compares to 2.88% for the third quarter of fiscal 2016.
The net interest margin for the nine months ended June 30, 2017 was
2.78% compared to 2.91% for the nine months ended June 30,
2016.
Noninterest income was $2.1 million for the
three months ended June 30, 2017, compared with $2.3 million for
the three months ended June 30, 2016. The decrease in fiscal third
quarter 2017 primarily reflected a decreased gain on sale of
investments and lower service fees and insurance commissions.
Noninterest income was $5.8 million for the nine months ended June
30, 2017, compared to $6.4 million for the nine months ended June
30, 2016, primarily reflecting a decrease in gain on sale of
investments and a decline in service fees on deposit accounts.
Noninterest expense decreased $331,000 or 3.1%, to $10.3 million
for the three months ended June 30, 2017 compared with $10.7
million for the comparable period in 2016. Period over period
decreases in several expense categories are due primarily to
management’s ongoing efforts to increase efficiencies and reduce
costs. Noninterest expense decreased $317,000 to $31.2 million for
the nine months ended June 30, 2017 from the comparable period in
2016.
The Company’s effective tax rates declined for both the three
and nine month periods ended June 30, 2017 compared to the same
periods in 2016. The declines were due primarily to the
previously disclosed adoption, by the Company, of ASU 2016-09
during the first fiscal quarter of 2017. The adoption resulted in
the recognition of all excess tax benefits for share-based payment
awards being recognized in income taxes. Previously, such tax
benefits were recognized in additional paid in capital.
Balance Sheet, Asset Quality and Capital Adequacy
Review
Total assets were $1.76 billion at June 30, 2017, compared with
$1.77 billion at September 30, 2016, primarily reflecting declines
in total cash and cash equivalents and investment securities for
sale, which were partially offset by increased loans
receivable.
Total net loans increased $5.0 million at June 30, 2017, to
$1.224 billion, compared to September 30, 2016. Commercial real
estate, commercial & industrial, construction and municipal
loans increased during the period. Residential mortgage loans and
indirect auto loans declined, primarily reflecting slowing demand
throughout 2017.
Total deposits increased $1.6 million, or 0.1%, to $1.22 billion
at June 30, 2017, from $1.21 billion at September 30, 2016. During
the same period, borrowings decreased $16.2 million. Core deposits
were $703.0 million, or 58% of total deposits at June 30, 2017,
compared with $600.9 million or 51% of total deposits at June 30,
2016.
Asset quality remained strong. Nonperforming assets totaled
$20.8 million, or 1.18% of total assets, at June 30, 2017, compared
to $23.5 million, or 1.33% of total assets, at June 30, 2016 and
$22.0 million, or 1.24% of total assets at September 30, 2016. The
allowance for loan losses was $9.2 million, or 0.75% of loans
outstanding, at June 30, 2017, compared to $9.1 million, or 0.74%
of loans outstanding at September 30, 2016.
For the fiscal third quarter of 2017, the Company’s return on
average assets and return on average equity were 0.40% and 3.90%,
compared with 0.48% and 4.82%, respectively, in the corresponding
period of fiscal 2016. For the nine months ended June 30,
2017, the Company’s return on average assets and return on average
equity were 0.40% and 4.02%, compared with 0.48% and 4.69%,
respectively, in the corresponding period of fiscal 2016.
The Bank continued to demonstrate financial strength, with a
Tier 1 leverage ratio of 9.17%, exceeding regulatory standards for
a well-capitalized institution. The Company maintained a tangible
equity to tangible assets ratio of 8.98%.
Total stockholders’ equity increased $4.2 million to $180.6
million at June 30, 2017, from $176.3 million at September 30,
2016. Total stockholders’ equity was also up year-over-year.
Tangible book value per share at June 30, 2017 increased to $14.21,
compared with $14.05 at September 30, 2016, and $14.14 at June 30,
2016.
Outlook: Focus on Productivity, Building
Value
The Company plans to shortly complete and implement a series of
actions focused on supporting employee performance, enhancing
customer and market analysis, right-sizing Company resources, and
identifying opportunities to enhance efficiency and productivity.
Peter Gray, Director of Strategic Initiatives, commented: “A
talented, productive team is the cornerstone of a community bank’s
success, so the action plans lead with a formalized structure for
hiring, expectations, performance analysis and setting compensation
tied to performance. We plan to give our team greater support to
help ensure success.”
The Company is implementing systems to support new business and
customer retention, including a Marketing Customer Information File
(MCIF) system to provide more robust customer information, which
Gray noted will enable the ESSA team to more effectively identify
product and service opportunities to expand customer
relationships.
“Going hand-in-hand with our MCIF system is a business
development strategy to target opportunities in retail and
commercial banking, ESSA Investment Services and our trust and
advisory operation, as well as an expanded cost accounting system,”
Gray explained. “These integrated programs will provide the
information necessary to identify, measure and capitalize on our
best and most profitable business opportunities.”
With a focus on enhancing profitability and driving earnings,
the Company is implementing cost analysis, expense management and
financial projection systems, with key goals being to achieve a
meaningful reduction in the Company’s efficiency ratio and optimize
the asset and liability mix of ESSA’s balance sheet.
Olson concluded: “In the past several years, the Company has
grown substantially, becoming an organization with larger scope and
scale, a wide range of business lines, and broad regional market
coverage. Improved customer, market and internal analysis
capabilities, linked with focused goals for productivity and
performance, should provide meaningful advantages. Our ultimate
goal is to enhance the Company’s profitability and continue
delivering long term shareholder value.”
About the Company: ESSA Bancorp, Inc. is the
holding company for its wholly-owned subsidiary, ESSA Bank &
Trust, which was formed in 1916. Headquartered in
Stroudsburg, Pennsylvania, the Company has total assets of $1.8
billion and has 26 community offices throughout the Greater Pocono,
Lehigh Valley, Scranton/Wilkes-Barre, and suburban Philadelphia
markets. ESSA Bank & Trust offers a full range of
commercial and retail financial services, financial advisory and
asset management capabilities. ESSA Bancorp Inc. stock trades
on the NASDAQ Global Market (SM) under the symbol “ESSA”.
Forward-Looking Statements
Certain statements contained herein are “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
Such forward-looking statements may be identified by reference to a
future period or periods, or by the use of forward-looking
terminology, such as “may,” “will,” “believe,” “expect,”
“estimate,” “anticipate,” “continue,” or similar terms or
variations on those terms, or the negative of those terms.
Forward-looking statements are subject to numerous risks and
uncertainties, including, but not limited to, those related to the
economic environment, particularly in the market areas in which the
Company operates, competitive products and pricing, fiscal and
monetary policies of the U.S. Government, changes in government
regulations affecting financial institutions, including compliance
costs and capital requirements, changes in prevailing interest
rates, acquisitions and the integration of acquired businesses,
credit risk management, asset-liability management, the financial
and securities markets and the availability of and costs associated
with sources of liquidity, and the Risk Factors disclosed in our
annual and quarterly reports.
The Company wishes to caution readers not to place undue
reliance on any such forward-looking statements, which speak only
as of the date made. The Company wishes to advise readers that the
factors listed above could affect the Company's financial
performance and could cause the Company's actual results for future
periods to differ materially from any opinions or statements
expressed with respect to future periods in any current statements.
The Company does not undertake and specifically declines any
obligation to publicly release the result of any revisions, that
may be made to any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.
FINANCIAL TABLES FOLLOW
ESSA BANCORP, INC. AND SUBSIDIARY |
CONSOLIDATED BALANCE SHEET |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017 |
|
September 30,
2016 |
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
ASSETS |
|
|
|
Cash and
due from banks |
|
$ |
27,023 |
|
|
$ |
31,815 |
|
Interest-bearing deposits with other institutions |
|
|
6,536 |
|
|
|
11,843 |
|
|
|
|
|
Total
cash and cash equivalents |
|
|
33,559 |
|
|
|
43,658 |
|
Certificates of deposit |
|
|
1,000 |
|
|
|
1,250 |
|
Investment securities available for sale |
|
|
387,608 |
|
|
|
390,410 |
|
Loans
receivable (net of allowance for loan losses of $9,221 and
$9,056) |
|
|
1,224,206 |
|
|
|
1,219,213 |
|
Regulatory stock, at cost |
|
|
15,120 |
|
|
|
15,463 |
|
Premises
and equipment, net |
|
|
16,353 |
|
|
|
16,844 |
|
Bank-owned life insurance |
|
|
37,368 |
|
|
|
36,593 |
|
Foreclosed real estate |
|
|
2,859 |
|
|
|
2,659 |
|
Intangible assets, net |
|
|
2,002 |
|
|
|
2,487 |
|
Goodwill |
|
|
13,801 |
|
|
|
13,801 |
|
Deferred
income taxes |
|
|
11,231 |
|
|
|
11,885 |
|
Other
assets |
|
|
18,690 |
|
|
|
18,216 |
|
|
|
|
|
TOTAL
ASSETS |
|
$ |
1,763,797 |
|
|
$ |
1,772,479 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
Deposits |
|
$ |
1,216,462 |
|
|
$ |
1,214,820 |
|
Short-term borrowings |
|
|
145,665 |
|
|
|
129,460 |
|
Other
borrowings |
|
|
198,168 |
|
|
|
230,601 |
|
Advances
by borrowers for taxes and insurance |
|
|
12,213 |
|
|
|
4,956 |
|
Other
liabilities |
|
|
10,738 |
|
|
|
16,298 |
|
|
|
|
|
TOTAL
LIABILITIES |
|
|
1,583,246 |
|
|
|
1,596,135 |
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY |
|
|
|
Common
stock |
|
|
181 |
|
|
|
181 |
|
Additional paid in capital |
|
|
180,772 |
|
|
|
181,900 |
|
Unallocated common stock held by the Employee Stock Ownership
Plan |
|
|
(8,834 |
) |
|
|
(9,174 |
) |
Retained
earnings |
|
|
90,100 |
|
|
|
87,638 |
|
Treasury
stock, at cost |
|
|
(79,910 |
) |
|
|
(82,369 |
) |
Accumulated other comprehensive loss |
|
|
(1,758 |
) |
|
|
(1,832 |
) |
|
|
|
|
TOTAL
STOCKHOLDERS’ EQUITY |
|
|
180,551 |
|
|
|
176,344 |
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
1,763,797 |
|
|
$ |
1,772,479 |
|
|
|
|
|
ESSA BANCORP, INC. AND SUBSIDIARY |
CONSOLIDATED STATEMENT OF INCOME |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June
30, |
|
For the Nine Months Ended June
30, |
|
|
2017 |
2016 |
|
2017 |
2016 |
|
|
(dollars in thousands) |
|
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
receivable |
|
$ |
11,819 |
|
$ |
12,377 |
|
|
$ |
35,869 |
|
$ |
36,756 |
|
Investment securities: |
|
|
|
|
|
|
Taxable |
|
|
2,073 |
|
|
1,863 |
|
|
|
5,990 |
|
|
5,584 |
|
Exempt
from federal income tax |
|
|
295 |
|
|
277 |
|
|
|
907 |
|
|
776 |
|
Other
investment income |
|
|
221 |
|
|
206 |
|
|
|
671 |
|
|
581 |
|
Total
interest income |
|
|
14,408 |
|
|
14,723 |
|
|
|
43,437 |
|
|
43,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
Deposits |
|
|
2,186 |
|
|
1,903 |
|
|
|
6,267 |
|
|
5,692 |
|
Short-term borrowings |
|
|
376 |
|
|
175 |
|
|
|
923 |
|
|
384 |
|
Other
borrowings |
|
|
686 |
|
|
786 |
|
|
|
2,151 |
|
|
2,386 |
|
Total
interest expense |
|
|
3,248 |
|
|
2,864 |
|
|
|
9,341 |
|
|
8,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST
INCOME |
|
|
11,160 |
|
|
11,859 |
|
|
|
34,096 |
|
|
35,235 |
|
Provision
for loan losses |
|
|
750 |
|
|
600 |
|
|
|
2,250 |
|
|
1,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME
AFTER PROVISION FOR LOAN LOSSES |
|
|
10,410 |
|
|
11,259 |
|
|
|
31,846 |
|
|
33,435 |
|
|
|
|
|
|
|
|
NONINTEREST INCOME |
|
|
|
|
|
|
Service
fees on deposit accounts |
|
|
876 |
|
|
919 |
|
|
|
2,553 |
|
|
2,657 |
|
Services
charges and fees on loans |
|
|
285 |
|
|
272 |
|
|
|
912 |
|
|
849 |
|
Trust and
investment fees |
|
|
183 |
|
|
196 |
|
|
|
547 |
|
|
603 |
|
Gain on
sale of investments, net |
|
|
295 |
|
|
413 |
|
|
|
295 |
|
|
781 |
|
Earnings
on Bank-owned life insurance |
|
|
256 |
|
|
229 |
|
|
|
775 |
|
|
693 |
|
Insurance
commissions |
|
|
181 |
|
|
221 |
|
|
|
577 |
|
|
637 |
|
Other |
|
|
44 |
|
|
46 |
|
|
|
102 |
|
|
170 |
|
|
|
|
|
|
|
|
Total
noninterest income |
|
|
2,120 |
|
|
2,296 |
|
|
|
5,761 |
|
|
6,390 |
|
|
|
|
|
|
|
|
NONINTEREST
EXPENSE |
|
|
|
|
|
|
Compensation and employee benefits |
|
|
6,096 |
|
|
5,930 |
|
|
|
18,329 |
|
|
17,511 |
|
Occupancy
and equipment |
|
|
1,106 |
|
|
1,340 |
|
|
|
3,387 |
|
|
3,871 |
|
Professional fees |
|
|
570 |
|
|
588 |
|
|
|
2,150 |
|
|
1,713 |
|
Data
processing |
|
|
908 |
|
|
998 |
|
|
|
2,773 |
|
|
2,996 |
|
Advertising |
|
|
254 |
|
|
297 |
|
|
|
800 |
|
|
537 |
|
Federal
Deposit Insurance Corporation Premiums |
|
|
245 |
|
|
312 |
|
|
|
645 |
|
|
912 |
|
(Gain)loss on foreclosed real estate |
|
|
(19 |
) |
|
(77 |
) |
|
|
(120 |
) |
|
74 |
|
Merger
related costs |
|
|
- |
|
|
- |
|
|
|
- |
|
|
245 |
|
Amortization of intangible assets |
|
|
158 |
|
|
191 |
|
|
|
485 |
|
|
588 |
|
Other |
|
|
1,002 |
|
|
1,072 |
|
|
|
2,777 |
|
|
3,096 |
|
|
|
|
|
|
|
|
Total
noninterest expense |
|
|
10,320 |
|
|
10,651 |
|
|
|
31,226 |
|
|
31,543 |
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
2,210 |
|
|
2,904 |
|
|
|
6,381 |
|
|
8,282 |
|
Income
taxes |
|
|
448 |
|
|
792 |
|
|
|
1,051 |
|
|
2,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
1,762 |
|
$ |
2,112 |
|
|
$ |
5,330 |
|
$ |
6,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June
30, |
|
For the Nine Months
Ended June 30, |
|
|
2017 |
2016 |
|
2017 |
2016 |
Earnings per
share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.16 |
|
$ |
0.20 |
|
|
$ |
0.50 |
|
$ |
0.60 |
|
Diluted |
|
$ |
0.16 |
|
$ |
0.20 |
|
|
$ |
0.50 |
|
$ |
0.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended June 30, |
For the Nine Months Ended
June 30, |
|
|
2017 |
2016 |
2017 |
2016 |
|
|
(dollars in thousands) |
CONSOLIDATED AVERAGE
BALANCES: |
|
|
|
|
|
|
Total
assets |
|
$ |
1,753,590 |
|
$ |
1,758,054 |
|
$ |
1,761,148 |
|
$ |
1,722,081 |
|
|
Total
interest-earning assets |
|
|
1,634,862 |
|
|
1,648,870 |
|
|
1,639,459 |
|
|
1,614,679 |
|
|
Total
interest-bearing liabilities |
|
|
1,401,527 |
|
|
1,407,360 |
|
|
1,416,491 |
|
|
1,389,014 |
|
|
Total
stockholders’ equity |
|
|
181,441 |
|
|
176,321 |
|
|
177,075 |
|
|
174,294 |
|
|
|
|
|
|
|
|
|
PER COMMON SHARE
DATA: |
|
|
|
|
|
|
Average
shares outstanding - basic |
|
|
10,678,856 |
|
|
10,426,304 |
|
|
10,571,700 |
|
|
10,383,179 |
|
|
Average
shares outstanding - diluted |
|
|
10,743,008 |
|
|
10,553,138 |
|
|
10,640,224 |
|
|
10,508,476 |
|
|
Book
value shares |
|
|
11,592,699 |
|
|
11,384,720 |
|
|
11,592,699 |
|
|
11,384,720 |
|
|
|
|
|
|
|
|
|
Net interest rate
spread |
|
|
2.64 |
% |
|
2.80 |
% |
|
2.70 |
% |
|
2.83 |
% |
|
Net interest
margin |
|
|
2.74 |
% |
|
2.88 |
% |
|
2.78 |
% |
|
2.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact: Gary S. Olson, President & CEO
Corporate Office: 200 Palmer Street
Stroudsburg, Pennsylvania 18360
Telephone: (570) 421-0531
Grafico Azioni ESSA Bancorp (NASDAQ:ESSA)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni ESSA Bancorp (NASDAQ:ESSA)
Storico
Da Lug 2023 a Lug 2024